Student loan

madali

Hi, I my daughter is currently at university and we are trying to cover the costs ourselves. I need the loan asa cushion but want to invest it safely to gain interest and hopefully pay it off in full at the end of 3 yrs and then have some interest. With the interest rate falling are we best not receiving any more of the loan? It comes in 3 installments during the year and is £7, ooo in total.
Please advise. I don't want to get in more debt by trying to think smart.:j

The_One_Who

It would be your daughter who would apply for and receive the loan. It would go in to her bank account. And it's really up to her what she does with it. If she can afford to put it into a savings account with a rate higher than the 4.8% the loan is charging, it would be sensible.

rb10

The_One_Who wrote: »

If she can afford to put it into a savings account with a rate higher than the 4.8% the loan is charging, it would be sensible.

The interest rate on the Student Loan is 3.8% until 31/08/2009. This is the RPI (inflation) figure from March 2008.

The_One_Who

rb10 wrote: »

The interest rate on the Student Loan is 3.8% until 31/08/2009. This is the RPI (inflation) figure from March 2008.

Doh, sorry, I'm still thinking of last year! Well, better to overestimate than underestimate.

gozomark

this time next year RPI is likely to be negative.... CPI will be maybe 1%, but the direct impact of lower mortgage costs will mean RPI will be somewhat lower, so the interest rate in the second year will be much lower

Lokolo

gozo - thats hoping this big old recession kicks in ASAP. Otherwise it will still be rocket high!

gozomark

Lokolo wrote: »

gozo - thats hoping this big old recession kicks in ASAP.quote]

what makes you think it hasn't ?

its market consensus that CPI will be 1-2% in a years time, so I'm not saying anything extreme in this

Lokolo

gozomark wrote: »

what makes you think it hasn't ?

its market consensus that CPI will be 1-2% in a years time, so I'm not saying anything extreme in this

Becaus the current inflation rates are huuuuge. I don't want to be payiing 5%+ on my student loan :cool:

madali

Yes I know it will be her loan etc, just trying to do the sensible leg work to advise her. I will be covering the other costs and want to help her to become money savvy!! Thanks.

Rikki

My son puts his maintenance loans into ISa's each year.

This enables him to work while at university and not have to worry about tax if he ever becomes eligible for it.

bc3000

madali wrote: »

just trying to do the sensible leg work to advise her.

lol, the complete opposite of my mum. i heard it was a good idea to put the loan in a savings account if you're not using it a while back, from what other people say it still sounds like a good idea